Arm's Length Transaction: What It Means and Why It Matters
Warren Team
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Key terms
- Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that adjusts periodically based on market conditions. Initial rates are typically lower than fixed-rate mortgages but can increase over time.
- Foreign Transaction FeeA fee charged for purchases made in foreign currencies or with foreign merchants, typically 1-3% of the transaction. Many travel cards waive this fee.
- Room and BoardThe combined cost of housing and meal plans at a college or university, which is a significant portion of the overall cost of attendance. Room and board costs vary depending on whether you live on campus, off campus, or at home, and the type of meal plan you select. Many colleges require first-year students to live on campus and purchase a meal plan.
- Living Below Your MeansA financial philosophy of spending less than you earn, creating a surplus for saving and investing. This habit is the foundation of building wealth over time, regardless of income level. It requires distinguishing needs from wants.
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